The state Department of Health and Hospitals is getting ready to hire an internal inspector general to help it with Medicaid fraud prevention efforts.

The legislative auditor issued a report finding improper payments and falsification of documents in several programs in which it did spot checks. It was the fifth finding of ineffective audit controls in the non-emergency medical transportation program, according to the auditor’s report.

“The department ... should have an effective internal audit function to examine, evaluate, and report on its internal controls, including information systems, and to evaluate compliance with the policies and procedures that are necessary to maintain adequate controls,” DHH Undersecretary Jerry Phillips said.

The internal inspector general’s main role will be “to assess risk and devise an Internal Audit Plan for the department,” Phillips said.

Phillips said the position is expected to be filled by March.

DHH spokeswoman Kristen Sunde said a salary for the position has not yet been set because “the selected inspector general candidate’s salary will be commensurate with experience, as with any state position.”

Phillips advised Legislative Auditor Daryl Purpera that DHH would hire the internal inspector general in a letter responding to an audit of several agency units.

The audit was done to evaluate DHH’s accountability over public funds for the fiscal year that ended June 30, 2012.

The auditor identified $17,283 improper payments in a spot test of 188 claims paid in the non-emergency medical transportation program. In the case of the five of the claims, the primary owner of the business admitted signing verification forms as the driver when she was not the driver. An investigative audit is under way to determine the extend of the owner’s noncompliance.

In another finding, the auditor said DHH paid 75 Medicaid claims totaling $62,390 in the New Opportunity Waiver program that provides in-home support for the developmentally disabled for services provided by family members. Family members are not allowed to be paid caregivers.

In its spot check, the auditor’s office found that DHH paid 47 Medicaid claims total $5,578 to one provide for case management services that were not properly documented.

Phillips also said the internal inspector general will enter into and monitor a contract with an outside firm specializing in internal audit.

Sunde said solicitation for those services has not yet begun.